The scheme under which NHS staff are provided to our suppliers (known as the Managed Authority Employees scheme) is intended to provide NHS expertise to suppliers in order to ensure the design and development of systems is fully informed by frontline NHS experience. At cluster level (region) contracts were agreed by senior NHS management, so the NHS was fully involved in the decision-making process.

It is right that the development of new IT systems for the NHS should be informed by the experience of frontline staff. And the scheme to second staff to our suppliers enabled substantial reductions in the price of the contracts. These arrangements were considered and approved by the NHS as part of the approvals process, at the time the contracts were concluded.

In practice it has proven to be more challenging to the NHS than anticipated to provide these staff. Many of these staff are involved in the pre-deployment activities in their local health communities, or are engaged on 'Expert Reference Groups' which inform the design and development processes. We have therefore concluded discussions with the relevant suppliers to modify the schemes.

The outcome of the discussions with suppliers has been positive. In the Southern Cluster, even after accepting a financial liability of £19 million due to the inability of the NHS to provide these staff, the overall contract price is still c£20 million lower than would have been the case if the scheme had not been written into the original contracts.

In the North West and West Midlands Cluster, 30 per cent of the required secondees have been provided and discussions have resulted in the NHS being released from the obligation to provide more. Some £5 million has been paid to CSC in recognition of this but overall, the original contract price was still reduced because of the scheme.

It has been reported that the NHS has been "fined". The NHS has not been "fined". It has to pay for not meeting its contractual obligations. That is a fair way to conduct business. And to be clear, the net impact of the whole scheme has been to reduce the price of the contracts from which the NHS, both collectively and as individual organisations, will benefit.

In addition, it is completely incorrect to claim that the NHS National Programme for IT is over budget.

Theo central costs of the IT programme, covering the core contracts, are £6.2bn. These costs have not risen. However, we have long been clear that the cost of implementation will also include local NHS IT spend on software, hardware and training. These costs will be met by trusts' existing spend on IT - around £1bn a year - so to claim costs have spiralled to £20bn is misleading as it includes the £6.2bn central costs plus additional existing local spend on IT over the 10 year implementation of the programme. The NHS would have spent at least £10 billion on its old out-of-date IT.

In terms of the delays in implementation, as with any large complex programme there will be difficulties t deal with. However, over the course of a 10 year programme it is important to get things right over the long term rather than wrong to a short term timetable. The programme is steadily developing digital imaging in place of old x-rays, electronic prescriptions and booked appointments. Patients are getting increased choice of where and when they are treated.